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People with significant control - regime takes aim at AIM companies and immediate action may be required

The changes mentioned in our previous article to the "people with significant control" (PSC) regime have now come into force.

As expected, more entities have been brought within the scope of the PSC regime (including UK companies on AIM and NEX Exchange), with effect from 24 July 2017

Eligible Scottish partnerships have been brought within the PSC regime, with effect from 24 July 2017

Much shorter 14 day deadlines for dealing with changes to the PSC register have been introduced. Importantly, existing companies and LLPs should check whether any changes to their PSC register have been made since their last confirmation statement and notify Companies House by 9 July 2017, if the changes were not notified in a confirmation statement before 26 June 2017.

The changes are proposed as part of the implementation of the EU Fourth Money Laundering Directive (4MLD) which was required to be implemented across the EU by 26 June 2017.

UK companies on AIM (and other prescribed markets such as NEX Exchange) are now within the scope of the PSC regime. There is a 4 week transitional period until 24 July 2017 to collect the information and produce a PSC register. Bear in mind that it is possible for companies to note in their PSC register that they are taking steps to identify their PSCs, if any.

When the PSC regime was introduced last year AIM companies (and those listed on the main market of the London Stock Exchange) were specifically exempted as they are subject to shareholder disclosure requirements under Chapter 5 of the Financial Conduct Authority's Disclosure and Transparency Rules (DTR5). Last November, the Government announced a consultation on the regime in light of the implementation of 4MLD. The consultation stated that the Government was considering whether the PSC regime would need to be extended to cover companies quoted on AIM and other markets which do not fall within the 4MLD's definition of a "regulated" market (the main market of the London Stock Exchange is a "regulated" market whereas AIM is not). AIM companies now have to comply with both DTR5 and the PSC regime for the time being at least. For more on the detailed requirements of the PSC regime, please refer to our dedicated PSC Register page.

Eligible Scottish partnerships have also been brought into the PSC regime with effect from 24 July 2017. There is detailed guidance on the definition of "eligible" and the concept of control as there is for companies and LLPs. Eligible Scottish partnerships will not be required to maintain a PSC register but will need to file their PSC information at Companies House.

A limited number of unregistered companies have also been brought into the PSC regime with effect from 24 July 2017.

Dealing with changes to PSC information – 14 day deadlines

4MLD requires PSC information to be "accurate and current". From 26 June 2017 (or 24 July 2017 for those entities being brought into the PSC regime), entities will be required:

to update their PSC register within 14 days of confirming (for individual PSCs) or obtaining (for relevant legal entities) the relevant particulars; and

to notify Companies House of the change to the PSC register within a further 14 days from updating their PSC register.

The 14 day deadline to update the PSC register begins to run from when the relevant particulars have been obtained by the company (and confirmed in the case of individual PSCs).

The 14 day deadline to notify Companies House begins to run from the date the PSC register is updated.

There is also a 14 day deadline to deliver notices where the entity knows or has reasonable cause to believe that a change has occurred. Notices are only required where the entity does not already have the necessary particulars or confirmation.

The consultation initially suggested a 6 month period so this is a significant change. Failure to update within these time periods is an offence.

There will be a requirement to confirm that PSC information is correct, where the information has not been updated in the previous 12 months, in the confirmation statement.

Dealing with changes to PSC information for entities already subject to the PSC regime

Changes to a PSC register that took place before 26 June 2017, but were not notified in a confirmation statement before that date, must be notified to Companies House by 9 July 2017 using Forms PSC01 to PSC09 (as appropriate).​

The immediate 14 day filing requirement does not apply in respect of additions or changes to a PSC register notified to Companies House before 26 June 2017 in a confirmation statement.

Transitional arrangements also require that if a company already had a duty to notify a person or entity of a relevant change on or before 26 July 2017 then it must do so by 9 July 2017.

We are in the process of updating our more detailed PSC briefing note and will re-issue this shortly.

The Government has updated its statutory guidance for companies on the meaning of "significant influence or control" and its non-statutory guidance. It has also published guidance for eligible Scottish partnerships on the meaning of "significant influence or control". For more, please click on the links below.

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